[Parker] Will the U.S. election determine the future of Cryptocurrency?
[Parker’s Crypto Story] The 2020 United States presidential election, which is scheduled for Nov. 3, is just around the corner. Investors are scrambling to calculate the possible scenarios after the election and come up with new strategies. The cryptocurrency market is not an exception. How will the U.S. presidential election affect the cryptocurrency market? #Trump, “Bitcoin is not money, the dollar is the best” Let’s see what Donald Trump and Joe Biden think about cryptocurrency. According to reports from the "to be released" book from John Bolton, the former U.S. National Security Advisor, Trump told Steven Mnuchin, the U.S. Secretary of the Treasury to “go after bitcoin” and “don’t be a trade negotiator” in 2018. Although it was devoid of context, people at the time interpreted the sentence as “Don’t be a negotiator between the U.S.-China trade war and just chase the bitcoin that China has been leading in the market.” If that interpretation is right, we can tell that Trump already knew the basic information about bitcoin in 2018. In 2019, Trump again took a negative stance toward. He said that he's not a fan of Bitcoin and other cryptocurrencies, saying they were volatile and had no real value. He added said that unregulated assets can cause unlawful behavior. #Biden “I don’t have Bitcoin.. but will accept dollar donations” It’s nearly impossible to find any comments Biden has made about bitcoin. It once became an issue in July when Biden’s Twitter account was hacked and the hacker made a bitcoin-related posting through his account. In response to the controversy, Biden posted this: “I don’t have Bitcoin, and I’ll never ask you to send me any. But if you want to chip in to help make Donald Trump a one-term President, you can do that here,” and left a link. Only dollars were allowed to be donated at the link. With just this, we can’t know anything about Biden’s stance on cryptocurrency. But we can assume it through the pledges he hs made. According to his tax proposals, he wants to raise corporate income tax rate from 21 percent to 28 percent and top income tax rate from 37.5 percent to 39.6 percent. He also said he is imposing ordinary income tax rates on capital gains and dividends for those making at least $1 million. Based on his proposal, people who have cryptocurrency worth $1 million will have to pay a maximum 38.6 percent in tax. This would impose a heavy burden on the U.S.’s bitcoin whales. The tax issue, however, might be good news to the cryptocurrency industry. Chris Larsen, the executive chairman and co-founder of Ripple, recently hinted that cryptocurrency might be able to be institutionalized as soon as taxes are applied to mining. As Biden has shown an interest in discovering new business opportunities such as renewable energy, it could deliver a positive message to the cryptocurrency market. Parker’s note: Possible Scenarios after the election In fact, it might not be a good idea to predict the future of the cryptocurrency industry when there are so many variables to consider. However, if we are aware of the variables in advance, we can take actions faster than others. If we don’t have any scenarios, there will be nothing we can do in the future — this is the reason why we have to consider it in advance. To look at the possible scenarios for the future of cryptocurrency, it depends on who wins the election. If Trump succeeds, there will be no big changes to the industry. Many finance experts say that the reelection of Trump and existing lawmakers is the best-case scenario for the stock market as that would have fewer variables. One issue still remains: The ongoing trade war between China. It will not be a full-scale war, but possibly could attack the stock market. If Biden wins the election, there are so many variables to consider. As Biden came up with many proposals that contrast Trump, the market will change in a totally different way. It will become worse depending on the changes of lawmakers in the Senate. A recount of the election might be the worst-case scenario. In 2000, there was a presidential recount in Florida. The election finally ended after a month when the U.S. Supreme Court declared the losing of Al Gore. During the process, the S&P 500 Index fell 8 percent while the Nasdaq plunged 22 percent. Considering the past, we should always keep it mind that the stock might see a sharp drop after the election process.